Advice on debt payments and credit rating

tracey_02

Hi all,

Hoping someone can give me some advice.... I have bad credit due to a number of debts, I am currently looking at beginning to pay back what I owe in monthly installments over the next 3 or 4 years. Will my credit rating start to improve as I begin paying these off providing I pay on time every month and never miss any payments? Or will this only ever improve once I am completely debt free?

Thanks for any advice anyone can offer

BackOnTrack

Depends on your exact circumstances. If you have late payments then I think 6 months to a year of ontime payment is enough to get your credit rating to a better level. if you have defaults or CCJs then it will be 6 years after these were issued before your credit rating will be better.

tracey_02

At the moment I have an earnings arrestment for graduate endowment and owe some past council tax bills which I am in the process of arranging a payment plan to settle. I was hoping that my credit rate would start improving but I don't think it will for some time

Tixy

Council tax bills are dealt with under liability orders - and do not appear on your credit file. An earnings arrestment will be after a CCJ have been issued - so will stay on your file for 6years from the date of the CCJ.

Have you looked at your credit file to see what it actually shows currently?

tracey_02

I have just applied to get my credit report from Experian but I think that this takes a few days before I can look it up. Do you think that the council tax arrears won't be affecting my credit rating at the moment? I know that it must bad as I have been refused a new bank account...

Tixy

I think they won't be affecting it. But if you have a CCJ for the debt you are paying by earnings arrestment then getting a 'normal' bank account will be very difficult. You'll probably need to apply for a basic bank account see here for info and on page 5 a list of each bank basic account and the facilities they have - http://www.moneymadeclear.org.uk/pdfs/bank_accounts.pdf

Edit - wait are you in Scotland? if so things are different.

Your council tax will be initially a summary warrant not a liability order - I'm not sure if this will appear on your credit file or not - hopefully someone in scotland can advise.

Regarding the graduate account you will likely have a court decree for this debt (similar to a CCJ in england/wales), this will appear on your file and will be stopping you getting a regular bank account.

tracey_02

thank you for your advice I was hoping that the regular payments would gradually increase my credit rating but not really sure as to how this works, hopefully once I have my credit report I will have a better idea on what my options are and how to do this but at the moment looks like I may not be able to for 6 years

oh yes I am in Scotland.

I think I am getting myself into more of a muddle trying to sort out the problem than I did causing it in the first place!